ScreenVeritAI
    INDUSTRY WORKFLOWS · GUIDEUPDATED 2026-08-20
    Industry Workflows

    Legal and Accounting Due Diligence Screening

    Client acceptance and matter screening for law firms and accountancy practices: obliged-entity status, professional-services sanctions bans, source of funds, and how to document a defensible engagement decision.

    Law firms, accountancy practices, audit firms and tax advisers occupy an unusual compliance position: they are gatekeepers by regulation, not by choice. Under the EU anti-money laundering framework, auditors, external accountants, tax advisers, notaries and independent legal professionals are obliged entities when they participate in specified financial or real-estate transactions or assist in planning them, and the Financial Action Task Force sets equivalent expectations for designated non-financial businesses and professions in Recommendations 22 and 23. In the United Kingdom the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 impose the same duties, supervised through professional body supervisors rather than a single regulator. Sanctions law adds a second layer that is specific to this sector: the EU and the UK both prohibit the provision of a defined set of professional and business services — accounting, auditing, bookkeeping, tax consultancy, business and management consultancy, public relations and certain legal advisory services — to Russian entities. Screening at client acceptance and at matter level is how a practice evidences that it looked before it acted.

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    What this workflow covers

    SCOPE
    • Screen at client acceptance and again at matter or engagement level, because the risk sits in what the practice is asked to do, not only in who is asking.
    • Cover the client entity, its directors, its beneficial owners and, on transactional matters, the counterparties and the source of the funds involved.
    • Check sanctions lists in every jurisdiction with a nexus to the engagement — OFAC, the EU consolidated list, the UN Consolidated List and the UK Sanctions List are the common baseline.
    • Apply the professional-services prohibitions specifically: EU and UK measures restrict supplying accounting, audit, bookkeeping, tax, management consultancy, public relations and certain legal advisory services in defined circumstances.
    • Run PEP screening on owners and controllers, and document the enhanced due diligence and senior approval that a PEP relationship requires.
    • Verify source of funds and source of wealth on higher-risk matters, and record what was verified rather than only that it was.
    • Use adverse media in the client's operating language — enforcement, insolvency and fraud reporting appears locally first and is often absent from English-language coverage.
    • Escalate to a client acceptance or engagement committee against written thresholds so that the same facts produce the same decision across offices.
    • Re-screen at engagement renewal, at scope expansion, on ownership change and on a periodic cycle for retained clients; a client cleared at acceptance is unverified later.
    • Retain the screening evidence, the reviewer, the rationale and the approval in the client file, aligned with your supervisor's record-keeping expectations.

    Key statistics

    DATA
    FATF standard for professions
    Recommendations 22 and 23 — DNFBP customer due diligence and reporting
    Financial Action Task Force
    UK obligation
    Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017
    UK Legislation
    Screening points per client
    Acceptance, matter, renewal, scope change, ownership change
    ScreenVeritAI professional services workflow model

    Compliance glossary

    TERMS
    DNFBP
    Designated Non-Financial Business or Profession — the Financial Action Task Force category covering lawyers, notaries, accountants, trust and company service providers, real-estate agents, casinos and dealers in precious metals and stones, all subject to customer due diligence expectations.
    Client acceptance
    The formal decision process by which a professional practice takes on a new client, combining identity and ownership verification, sanctions and PEP screening, adverse media review, conflict checks and an assessment of whether the proposed work is permissible.
    Source of funds
    The origin of the specific money used in a transaction or engagement, as distinct from source of wealth, which is the origin of the client's overall assets. Both are standard enhanced due diligence requirements on higher-risk matters.
    Professional body supervisor
    A professional institute or regulator designated to supervise anti-money laundering compliance among its members, the model used in the United Kingdom for legal and accountancy practices in place of a single financial regulator.

    Authoritative references

    SOURCES

    Expert perspective

    NOTE

    “Risk controls perform best when sanctions checks and ownership context are reviewed together.”

    ScreenVeritAI Compliance Team · RegTech Research

    Frequently asked questions

    Q&A
    Q.01
    Are law firms and accountants required to run sanctions and AML screening?
    In most major jurisdictions, yes. Auditors, external accountants, tax advisers, notaries and independent legal professionals are obliged entities under the EU anti-money laundering framework when they participate in specified financial or real-estate transactions, and the UK Money Laundering Regulations 2017 impose equivalent duties. Sanctions prohibitions apply to every firm regardless of anti-money laundering status.
    Q.02
    What is client acceptance screening?
    Client acceptance screening is the check a practice runs before taking on a new client: identity and beneficial ownership verification, sanctions and watchlist screening, PEP identification, adverse media review, and an assessment of whether the proposed work itself is permissible. It produces the record that supports the decision to accept, decline or accept with conditions.
    Q.03
    Why screen at matter level as well as client level?
    Because a permissible client can bring an impermissible matter. A transaction may involve a designated counterparty, a restricted jurisdiction, or a service category that sanctions specifically prohibit, none of which appear when only the client is screened. Matter-level screening also catches the counterparties, targets and funders that a client-level check never sees.
    Q.04
    Which professional services are restricted under Russia sanctions?
    EU measures under the Russia regime prohibit supplying a defined list that has included accounting, auditing, bookkeeping and tax consultancy, business and management consultancy, public relations, architectural and engineering services, IT consultancy and certain legal advisory services to the Russian government or entities established in Russia. The UK maintains comparable professional and business services restrictions. Scope and exceptions change, so check the current instrument.
    Q.05
    Who supervises anti-money laundering compliance for legal and accounting firms?
    It varies by jurisdiction. The United Kingdom uses professional body supervisors — the accountancy and legal institutes and regulators — alongside HMRC for some sectors, rather than a single financial regulator. In EU member states, supervision usually sits with the national competent authority or a designated self-regulatory body, with the EU authority for anti-money laundering coordinating across them.
    Q.06
    How does legal professional privilege interact with reporting duties?
    Privilege limits, but does not eliminate, reporting obligations. Anti-money laundering frameworks generally exempt information obtained in the course of ascertaining a client's legal position or in connection with legal proceedings, while information obtained when a lawyer is participating in a transaction is not exempt. The boundary is jurisdiction-specific and should be set by the firm's own legal and compliance guidance.
    Q.07
    How often should retained clients be re-screened?
    On a periodic cycle set by risk rating, and on triggers: engagement renewal, a material change of scope, a change in ownership or control, an adverse media report, or a new designation touching the client's country or sector. For long-running retainers, event-driven re-screening on list updates is the control that prevents an unnoticed designation continuing unchallenged.
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